How AI Is Driving Holiday Shopping Innovation

Artificial intelligence is transforming the way we shop, offering unprecedented levels of personalisation and efficiency.

Artificial intelligence (AI) is reshaping how consumers approach holiday shopping, offering tools that function as virtual personal shoppers.

Dynamic Yield by Mastercard, for instance, introduced its AI-powered assistant, Shopping Muse, to enhance gift selection through natural language interactions.

“Shopping Muse allows users to ask detailed questions such as ‘What should I gift my 15-year-old son for the holidays?’ and refine the search further with follow-ups,” explains Ori Bauer, CEO of Dynamic Yield.

Using image recognition, the assistant can suggest visually similar items to user preferences. Bauer adds, “We aim to make holiday shopping smarter, delivering more tailored recommendations for each shopper’s unique needs.”

Beyond recommending products, AI tools enable platforms to personalise the browsing experience by showcasing customer reviews and purchase trends, helping shoppers make confident decisions.

Smarter marketing for a crowded holiday season

Retailers are leveraging AI to streamline their marketing efforts during the busy holiday period.

Personalisation engines now adapt email content and advertisements based on real-time user interactions, creating highly relevant outreach. This capability allows brands to dynamically adjust recommendations and visuals to resonate with individual preferences.

“When shoppers see targeted content that matches their current interests, they are more likely to engage positively,” says Bauer. AI also plays a role in optimising the checkout process by prompting users about shipping deadlines or offering bundled deals to meet free shipping thresholds.

These enhancements aim to reduce friction and boost conversions.

Strengthened security measures

AI is also bolstering payment security, a critical aspect of digital shopping. In 2023, Mastercard’s AI systems prevented $20 billion in potential fraud. The company’s Decision Intelligence Pro tool, launched earlier this year, analyses over a trillion data points to verify transactions in real time.

“Unnecessary friction or fraud are the last things holiday shoppers want to deal with,” says Johan Gerber, executive vice president for Security Solutions at Mastercard.

By identifying suspicious activity faster and reducing false positives, the tool enhances consumer trust and streamlines the shopping experience.

A growing digital shift

While traditional in-store shopping remains the dominant mode of spending, online retail is growing rapidly.

During Black Friday, online sales rose 14.6%, far outpacing the 0.7% growth in physical retail, according to Mastercard SpendingPulse.

AI’s influence in e-commerce is expected to sustain this momentum, enhancing shopping experiences while providing greater security and efficiency.

Source from Retail Insight Network

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